Electricity Market
In economic terms, electricity (both power and energy) is a commodity capable of being bought, sold and traded. An electricity market is a system for effecting purchases, through bids to buy; sales, through offers to sell; and short-term trades, generally in the form of financial or obligation swaps. Bids and offers use supply and demand principles to set the price. Long-term trades are contracts similar to power purchase agreements and generally considered private bi-lateral transactions between counterparties.
Wholesale transactions (bids and offers) in electricity are typically cleared and settled by the market operator or a special-purpose independent entity charged exclusively with that function. Market operators do not clear trades but often require knowledge of the trade in order to maintain generation and load balance. The commodities within an electric market generally consist of two types: power and energy. Power is the metered net electrical transfer rate at any given moment and is measured in megawatts (MW). Energy is electricity that flows through a metered point for a given period and is measured in megawatt hours (MWh).
Markets for energy related commodities are net generation output for a number of intervals usually in increments of 5, 15 and 60 minutes. Markets for power related commodities required by, managed by (and paid for by) market operators to ensure reliability, are considered ancillary services and include such names as spinning reserve, non-spinning reserve, operating reserves, responsive reserve, regulation up, regulation down, and installed capacity.
In addition, for most major operators, there are markets for transmission congestion and electricity derivatives, such as electricity futures and options, which are actively traded. These markets developed as a result of the restructuring of electric power systems around the world. This process has often gone on in parallel with the restructuring of natural gas markets.
Read more about Electricity Market: History, Nature of The Market, Wholesale Electricity Market, Retail Electricity Market, Electricity Market Experience
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Famous quotes containing the words market and/or electricity:
“I respect not his labors, his farm where everything has its price, who would carry the landscape, who would carry his God, to market, if he could get anything for him; who goes to market for his god as it is; on whose farm nothing grows free, whose fields bear no crops, whose meadows no flowers, whose trees no fruit, but dollars; who loves not the beauty of his fruits, whose fruits are not ripe for him till they are turned to dollars. Give me the poverty that enjoys true wealth.”
—Henry David Thoreau (1817–1862)
“There are two great unknown forces to-day, electricity and woman, but men can reckon much better on electricity than they can on woman.”
—Josephine K. Henry, U.S. suffragist. As quoted in History of Woman Suffrage, vol. 4, ch. 15, by Susan B. Anthony and Ida Husted Harper (1902)